{"id":35320,"date":"2025-11-26T07:43:21","date_gmt":"2025-11-26T07:43:21","guid":{"rendered":"https:\/\/naijaglobalnews.org\/?p=35320"},"modified":"2025-11-26T07:43:21","modified_gmt":"2025-11-26T07:43:21","slug":"november-global-regulatory-brief-risk-capital-and-financial-stability-insights","status":"publish","type":"post","link":"https:\/\/naijaglobalnews.org\/?p=35320","title":{"rendered":"November Global Regulatory Brief: Risk, capital and financial stability | Insights"},"content":{"rendered":"<p>\n<\/p>\n<p>Regulatory implications<\/p>\n<p><span style=\"font-weight: 400;\">Unlike banks, nonbanks mostly operate under lighter prudential regulation and often provide limited disclosure of their assets, leverage, and liquidity which makes vulnerabilities and interconnections harder to detect.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The IMF notes the approach of regulators in the UK and Australia where they have begun integrating system-wide stress tests and scenario analysis to better understand the dynamics at play.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For banks, the IMF underscores the importance of implementing the Basel III standards and advancing recovery and resolution frameworks to safeguard the sector against contagion from weak banks.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For non-banks, the IMF calls for enhanced supervision through more extensive data collection, improving forward-looking analysis, and strengthening co-ordination between supervisors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The IMF calls for improving and expanding the availability and usability of liquidity management tools for open-ended investment funds to address pressures and forced bond sales by non-banks.<\/span><\/li>\n<\/ul>\n<h2>OJK issues two new regs on capital and liquidity structure<\/h2>\n<p><span style=\"font-weight: 400;\">OJK Strengthens Capital and Liquidity Structure with Two New Regulations for Islamic Banks<\/span><\/p>\n<p>Summary<\/p>\n<p><span style=\"font-weight: 400;\">Jakarta, October 31, 2025 \u2014 The Financial Services Authority of Indonesia (OJK) has <\/span><span style=\"font-weight: 400;\">issued <\/span><span style=\"font-weight: 400;\">two new regulations aimed at enhancing the resilience and competitiveness of the national Islamic banking industry:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">OJK Regulation (POJK) No. 20 of 2025 on the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for Islamic Commercial Banks (BUS) and Islamic Business Units (UUS).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">OJK Regulation (POJK) No. 21 of 2025 on the Leverage Ratio for Islamic Commercial Banks.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">These regulations reinforce capital structure, liquidity management, and long-term funding for Islamic banks, aligning Indonesia\u2019s Islamic finance system with international standards under Basel III and the Islamic Financial Services Board (IFSB).<\/span><\/p>\n<p>In more detail<\/p>\n<p>POJK No. 20 of 2025 \u2013 Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)<\/p>\n<p><span style=\"font-weight: 400;\">This regulation requires Islamic Commercial Banks (BUS) and Islamic Business Units (UUS) to maintain both the LCR and NSFR at a minimum of 100 percent, ensuring robust short-term liquidity and stable long-term funding. Implementation will be phased in from 2026 to 2028 in line with industry readiness.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The rule mandates regular calculation, monitoring, and reporting of liquidity and funding adequacy \u2014 both on an individual and consolidated basis \u2014 to ensure transparent and measured liquidity risk management.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Modeled after Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools and The Net Stable Funding Ratio, and guided by IFSB\u2019s Guidance Note GN-6, this regulation aims to align Indonesia\u2019s Islamic banking framework with international best practices.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ultimately, this is expected to enhance liquidity discipline, improve asset\u2013liability composition, and strengthen banks\u2019 ability to withstand multiple stress scenarios \u2014 all without compromising their intermediation function.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This initiative is part of the 2023\u20132027 Islamic Banking Development and Strengthening Roadmap (RP3SI), particularly under Pillar I (industry resilience) and Pillar V (regulation, licensing, and supervision).<\/span><\/p>\n<p>POJK No. 21 of 2025 \u2013 Leverage Ratio<\/p>\n<p><span style=\"font-weight: 400;\">This regulation introduces a new capital adequacy indicator to strengthen the resilience of Islamic Commercial Banks by requiring a minimum leverage ratio of 3 percent, consistent with global Basel III and IFSB-23 standards.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The leverage ratio enhances the industry\u2019s awareness of maintaining proportional business growth relative to its capital base, independent of risk-weighted asset adjustments. This helps banks anticipate potential deleveraging impacts across various scenarios.<\/span><\/p>\n<p>The regulation, effective September 17, 2025, requires:<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">First reporting: end of Q1 2026<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">First public disclosure: September 2026<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Banks failing to meet the minimum threshold must submit a corrective action plan to OJK. Non-compliance may result in administrative sanctions, including fines or non-monetary penalties.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This move supports the creation of a strong capital foundation for Islamic Commercial Banks, enabling a healthy, globally competitive, and resilient Islamic banking system.<\/span><\/p>\n<p>Next steps<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For BUS and UUS:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Begin internal readiness assessments for LCR, NSFR, and leverage ratio calculations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Develop systems and processes for phased reporting between 2026\u20132028.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Integrate risk management frameworks aligned with Basel III and IFSB standards.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For OJK:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Continue supervision and capacity building to ensure smooth transition and compliance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Facilitate harmonization of Islamic financial reporting and monitoring tools.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These new regulations mark a significant milestone in building a resilient, efficient, and internationally competitive Islamic banking ecosystem in Indonesia.<\/span><\/p>\n<h2>HKMA consults on new capital requirements for cryptoasset exposures<\/h2>\n<p><span style=\"font-weight: 400;\">The HKMA is seeking industry feedback on a proposed prudential framework for cryptoasset exposures held by locally incorporated authorized institutions, aligning with global standards.<\/span><\/p>\n<p>In more detail<\/p>\n<p><span style=\"font-weight: 400;\">The Hong Kong Monetary Authority (HKMA) issued a letter to <\/span><span style=\"font-weight: 400;\">consult <\/span><span style=\"font-weight: 400;\">the banking industry on proposed changes to the Supervisory Policy Manual (SPM) module CA-G-1, on the capital adequacy regime.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The proposal introduces a comprehensive prudential framework for Authorized Institutions\u2019 (AIs) exposures to cryptoassets. It outlines a risk-based approach by categorizing cryptoassets into different groups, assigning differentiated capital treatments. New sections covering the topic include \u201cCredit risk (cryptoasset exposures)\u201d and\u201dCalculation of risk-weighted amounts of cryptoasset exposures.\u201d The revisions are designed to align the capital adequacy requirements with international Basel III standards and also cover derivatives, market risk, and infrastructure-related exposures.<\/span><\/p>\n<p>What\u2019s next<\/p>\n<p><span style=\"font-weight: 400;\">The consultation period is open until November 24, and the HKMA currently anticipates the revised standards to be implemented starting January 1, 2026.<\/span><\/p>\n<h2>UK and Switzerland publish guidance for firms on the Berne Financial Services Agreement (BFSA)<\/h2>\n<p>Summary<\/p>\n<p><span style=\"font-weight: 400;\">The United Kingdom\u2019s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have issued<\/span><span style=\"font-weight: 400;\"> joint guidelines for UK and Swiss firms on implementing the Berne Financial Services Agreement (BFSA)<\/span><span style=\"font-weight: 400;\">. The BFSA establishes mutual recognition of financial services regulation between the UK and Switzerland, allowing cross-border provision of wholesale financial services based on deference to each jurisdiction\u2019s supervisory frameworks. The guidance clarifies notification procedures, eligibility criteria, and reporting obligations for firms operating under the new regime. Similarly, Switzerland\u2019s financial regulator <\/span><span style=\"font-weight: 400;\">FINMA also published guidelines<\/span><span style=\"font-weight: 400;\"> for interested institutions.<\/span><\/p>\n<p>Context<\/p>\n<p><span style=\"font-weight: 400;\">The BFSA represents the first bilateral financial services agreement of its kind between the UK and Switzerland since Brexit, formalising regulatory cooperation and equivalence across key sectors such as investment and insurance services. It aims to simplify market access for wholesale and high-net-worth clients while maintaining robust prudential standards and investor protection. The framework also strengthens supervisory collaboration among the FCA, PRA, Bank of England, and Switzerland\u2019s FINMA.<\/span><\/p>\n<p>Key takeaways<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Mutual Recognition Framework: Each country recognises the other\u2019s regulatory and supervisory systems as achieving equivalent outcomes in covered sectors, promoting market integrity and financial stability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Swiss Investment Services Firms:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">May provide cross-border investment and ancillary services to UK wholesale clients and high-net-worth individuals without UK authorisation, subject to notification and registration via FINMA\u2019s EHP platform.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Must meet conditions on client disclosures, annual reporting (by 30 April), and suitability tests for high-net-worth clients.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Required to obtain client consent for regulatory information sharing and ensure segregation of client assets when using sub-custodians.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">UK Insurance Firms:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">May offer certain general insurance services into Switzerland without Swiss authorisation, provided they meet solvency and prudential standards equivalent to Solvency II and are registered with FINMA.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Must report annually to FINMA (copied to PRA\/FCA) and confirm that services are also offered outside Switzerland.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Retail and life insurance are excluded; only large corporate clients (meeting at least two of turnover, balance sheet, or employee thresholds) are in scope.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">UK Investment Services Firms:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Must notify the FCA before providing investment services into Switzerland through client advisers on a temporary basis and comply with disclosure obligations for Swiss clients.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Next steps<\/p>\n<p><span style=\"font-weight: 400;\">Firms seeking to rely on the BFSA must complete the relevant notification process (via FCA Connect or FINMA\u2019s EHP system) before providing services.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Annual reporting deadlines begin in April 2026, covering the 2025 reporting year.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The FCA and PRA will publish corresponding rule amendments disapplying conflicting domestic provisions to give full effect to the BFSA.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Both regulators encourage firms to review their governance, client disclosure processes, and cross-border operational structures ahead of implementation.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Regulatory implications Unlike banks, nonbanks mostly operate under lighter prudential regulation and often provide limited disclosure of their assets, leverage, and liquidity which makes vulnerabilities and interconnections harder to detect. The IMF notes the approach of regulators in the UK and Australia where they have begun integrating system-wide stress tests and scenario analysis to better<\/p>\n","protected":false},"author":1,"featured_media":35321,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[3044,1790,1123,12239,14591,12300,736,18316],"class_list":{"0":"post-35320","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-capital","9":"tag-financial","10":"tag-global","11":"tag-insights","12":"tag-november","13":"tag-regulatory","14":"tag-risk","15":"tag-stability"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/35320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35320"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/35320\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/35321"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}